EU’s Fuel Quality Directive proposal a mixed message for oil sands

Despite reports to the contrary, the European Commission has actually given the Harper government and oil sands proponents a bit of mixed message with the release of their proposed Fuel Quality Directive.

On the one hand, Alberta bitumen will no longer be targeted for having higher carbon emissions than conventional crude, which is being widely covered as a victory for the industry and for Canadian officials who lobbied European regulators for the change. On the other hand, the EU’s Climate Action Commissioner said the proposal also provides an incentive not to use polluting fuels…“like for example oil sands”.

The EC announced today by way of a press release that it had adopted a proposal to implement the outstanding obligations from legislation passed in 2009 on reducing emissions from transportation fuels.

That legislation required European fuel suppliers to reduce emissions by 6 per cent using a 2010 baseline, and that hasn’t changed.

In implementing the reduction, however, bitumen was to be assigned a carbon emissions value much higher than conventional crude, resulting in a de facto ban on Canadian imports.

According to a Reuters report from last June, a leaked version of the Commission’s FQD proposal didn’t alter those values; suppliers just didn’t have use them when reporting their emissions.

Instead, they could report “European Union average greenhouse gas emission intensity per fuel”, which was good news for Canada and suggested a sustained lobbying effort by former Natural Resources Minister Joe Oliver and the Alberta government had proved effective.

On Tuesday, EU Climate Action Commissioner Connie Hedegaard acknowledged the Commission’s “initial proposal could not go through due to resistance faced in some Member States”, but she also highlighted how the proposal aims to wean Europe from the oil sands.

So the message is mixed.

“The Commission is today giving this another push, to try and ensure that in the future, there will be a methodology and thus an incentive to choose less polluting fuels over more polluting ones like for example oil sands,” Hedgaard is quoted in the release.

That release goes on to explain that the methodology for calculating the carbon intensity for different fuel types will use default values based on the emissions those fuel types produce over their entire life-cycles, which follows from the June leak.

While the Globe and Mail interpreted that as potentially opening the door to more Canadian exports, the Commission release suggests new methodology and transparency requirements related to the type and origin of transportation fuels will guide the market to do otherwise.

“The new methodology and strengthened reporting are also expected to lead to market signals that will ensure the 6% GHG reduction target is achieved,” the release says.

“This means that any potential increase in the volume of high carbon intensity crudes (such as oil sands), as compared to their 2010 baseline levels, would need to be met by proportional efforts to lower emissions in other areas. This could be achieved through the use of sustainable biofuels and electricity, or for instance, by reducing GHG emissions during fossil fuel extraction.”

With the new FQD proposal headed to the European Council within two months, and then to the the European Parliament, the Harper government was agnostic about the news.

“We support the FQD’s intent to reduce transportation emissions, but believe it should be based on science and the facts,” Chris McCluskey, director of communications for Natural Resources Minister Greg Rickford, wrote in an email.

“Our government will continue advocating for Canadian interests and Canadian jobs. We will not speculate on a hypothetical outcome of discussions related to the European Union Fuel Quality Directive. The Government of Canada will reserve further comment until such time that proposed regulations have come to a vote.”‎